NATA Anticipates FET Ruling Soon

An NPRM from the Treasury Department on the assessment of federal excise taxes (FET) in the aircraft management industry could be issued as early as August, according to Jorge Castro, a consultant to the National Air Transportation Association. Speaking at the group’s annual Air Charter Summit in Washington, D.C., last week, he told the audience that dialog has heated up between the Internal Revenue Service and FAA regarding regulation of the FET laws.

In a 2012 policy change, the IRS concluded that aircraft management services provided to owners could be subject to commercial FET, but after outcry from the industry, the agency acknowledged it needs better guidance and suspended audit assessments until the issuance of new rules. NATA has since served as a source of information for the IRS.

“Operational control is a very important concept that the FAA follows,” said Castro. “We thought it makes sense for the IRS rules to mirror and align with that concept.”

If the anticipated timeline for the proposed draft of the legislation holds true, it would pave the way for public hearings on the subject this fall and possible final rulemaking by year-end.